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05/24/2017

What Happens When You Marry for Money?

Everything we do in compensation is communication. This is not only the name of a fabulous book (see my bio), but it also describes a fundamental belief of many Compensation Cafe writers.

Compensation colleagues, you can create a compensation plan with this principle in mind, and still miss many important nuances. Why? Because compensation isn't just about numbers, it's also about people. Emotional, change-averse people. And you have to watch them very closely to understand how and what compensation communicates to them.

I've been reminded of this in a number of ways in the last few weeks. Here's one example. You can be giving an employee his/her best offer, and still be offering an employee a bad deal.

For example, an early stage company offers someone with a scarce set of skills the chance to join the company at premium pay -- even though they won't really need the individual's talent for close to a year. They don't want to lose him or her, but it's not really time yet in the company's evolution for this function to be up and running. The new hire will have short-term projects, but no actual job for a period of time.

Now, the employee may be very tempted by the compensation offer, and even impressed with the company's mission, but realistically, how much value is there in this value proposition for the employee? Over time, the employee is bound to notice that the quid pro quo is a little sketchy, even if his/her total compensation isn't.

I've worked with a number of early stage companies who have tried this staffing strategy, but then they haven't noticed that it has worked to their detriment over the long haul. These "opportunity hires" remain highly compensated as well as entranced by the company's mission over the next few years, even as they speak more and more negatively about the deal they are getting. The money may have been a unique opportunity for the new hire, but it communicated messages of promise that were deflated over time.

Now, you may be nowhere near an early stage company -- and/or far away from paying premium for opportunity hires -- but this story still has something for you. We all pay close attention when we're putting an offer together, especially when it comes to hot talent, but do we try to understand the message that the new hire will take from that offer, especially over time?

I'm afraid that sometimes we marry for money. The first year works well enough but the second year, and so on, can be a doozy.

Margaret O'Hanlon, CCP brings deep expertise to discussions on employee pay, performance management, career development and communications at the Café. Her firm, re:Think Consulting, provides market pay information and designs base salary structures, incentive plans, career paths and their implementation plans. Earlier, she was a Principal at Willis Towers Watson. Margaret is a Board member of the Bay Area Compensation Association (BACA). She coauthored the popular eBook, Everything You Do (in Compensation) Is Communications, a toolkit that all practitioners can find at https://gumroad.com/l/everythingiscommunication.